Of the total withdrawal of Rs 10,164 crore so far this month (till September 22), over Rs 4,700 crore was withdrawn in the last week alone. (Representative image)
According to the depositories’ data, in the 15 trading days so far in September, FPIs were sellers within 11 days with a net withdrawal of Rs 10,164 crore.
Foreign portfolio investors (FPIs) have withdrawn over Rs 10,000 crore from Indian equities in the first three weeks of September, mainly due to rising US interest rates, recession fears and overvalued domestic equities.
Before the outflow, FPIs continuously bought Indian equities in the last six months from March to August and raised Rs 1.74 lakh crore during that period.
Mayank Mehra, manager and principal partner at Craving Alpha, believes strong economic growth prospects, attractive valuations and government reforms could support foreign investment flows in the coming month.
“As valuations remain elevated even after the recent pullback and US bond yields are attractive (the US 10-year yield is around 4.49 percent), FPIs are likely to pressure revenues as long as this trend continues,” says VK Vijayakumar, Chief Investment Strategist. at Geojit Financial Services, said.
According to the depositories’ data, in the 15 trading days so far in September, FPIs were sellers within 11 days with a net withdrawal of Rs 10,164 crore.
This figure includes bulk transactions and investments through the primary market.
Of the total withdrawal of Rs 10,164 crore so far this month (till September 22), over Rs 4,700 crore was withdrawn in the last week alone.
The latest outflow came after FPI investments in equities hit a four-month low of Rs 12,262 crore in August.
The FPI flows have been in a subdued pattern over the past few weeks. This hesitation among investors can be attributed to growing concerns over inflation and the interest rate landscape, especially in the US, coupled with uncertainties over global economic growth, said Himanshu Srivastava, Associate Director – Manager Research at Morningstar India.
As a result, investors have become cautious and have taken a wait-and-see approach when considering investments in emerging markets such as India, he added.
“Higher oil prices and higher US yields keep FPIs on the defensive, but we conclude that stable economic growth in India versus China and other emerging markets (EMs) will pull FPIs back into Indian equities,” says Hitesh. Jain, Institutional Equities Research Strategist at YES Securities India said.
On the other hand, FPIs invested Rs 295 crore in the country’s debt market during the period under review.
With this, the total investment by FPIs in equities has reached Rs 1.25 lakh crore so far this year and nearly Rs 28,476 crore in the debt market.
The sector data showed that as of September 15, mining, energy, services, oil and telecommunications recorded the highest outflows, and sectors such as financial services, capital food, consumer services, IT and real estate attracted cumulative purchases.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)
